Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Buying a Custom Built Gaming PC From - 1. Delivery and Unboxing - 17th Feb 20
BAIDU (BIDU) Illustrates Why You Should NOT Invest in Chinese Stocks - 17th Feb 20
Financial Markets News Report: February 17, 2020 - February 21, 2020 - 17th Feb 20
NVIDIA (NVDA) GPU King For AI Mega-trend Tech Stocks Investing 2020 - 17th Feb 20
Stock Market Bubble - No One Gets Out Of Here Alive! - 17th Feb 20
British Pound GBP Trend Forecast 2020 - 16th Feb 20
SAMSUNG AI Mega-trend Tech Stocks Investing 2020 - 16th Feb 20
Ignore the Polls, the Markets Have Already Told You Who Wins in 2020 - 16th Feb 20
UK Coronavirus COVID-19 Pandemic WARNING! Sheffield, Manchester, Birmingham Outbreaks Probable - 16th Feb 20
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Stock and Commodity Market Investors Heading for Six Months of Hell

Stock-Markets / Financial Markets 2010 Feb 16, 2010 - 08:17 AM GMT

By: Larry_Edelson


Best Financial Markets Analysis ArticleIn last week’s column, I reviewed the profits you should have bagged the week earlier. Total now, since March of last year, assuming you followed all of my suggestions: 11 closed out trades, including 9 winners — with gains of as much as 91.7% — one breakeven trade, and one loser. Not bad for just over 10 months.

I also reviewed with you three major reasons why the bull market in natural resources is still very much intact. More on that in a minute.

First, a warning: For the next three to six months, the markets will be shifting into a period of extreme volatility. It will be characterized by wild swings that will spook even the savviest and most professional of traders.

So you’re going to need nerves of steel. I’ll be sure to give you the extra guidance that you’ll need.

After all, not only are the cycles in the markets themselves shifting — but so are the underlying fundamentals. I’m not talking about any particular economic statistic. On a case-by-case basis, they don’t mean much.

That’s important to understand, because even when taken together, most economic data is not very helpful for investing because they are backward looking.

Stats such as unemployment, layoffs, manufacturing data, inventories, payrolls, even gross domestic product — tell you what happened, not what’s going to happen

For a forward-looking perspective that can help you anticipate what the markets are likely to do, you have to use the study of the science of cycles. That’s what I do, and I’ve been doing it extensively for almost thirty years.

And right now, the main cycles affecting all markets are shifting from strongly upward trending … to short-term, violently choppy patterns.

So you are bound to see …

arrow black Dead Ahead: Six Months of Investor Hell  A multi-month period of very large swings, in almost all markets. I’m talking several hundred points up and down in the Dow … $100 to $200 trading ranges in gold … $20 to $30 trading ranges in oil … and violent moves in just about everything publicly traded.

Importantly, you are also about to see …

arrow black Dead Ahead: Six Months of Investor Hell  Mass confusion in society at large. You will see mixed economic data streaming out. Many stats good; many terrible. For those who follow the fundamental forces impacting the economy and markets, you will be in a state of utter confusion.

You will also see tremendous swings in politics, both domestically and internationally. Obama’s popularity sinking like a rock … then surging … only to sink again. Crises in Europe, like that of Greece, will burst onto the scene, only to be resolved a few days later, then re-emerge in another country.

You will see increased trade tensions between countries … accusations … bickering, and more.

And, you will see investors swing from extreme optimism … to severe pessimism, and back.

But most of all, the majority of investors will get chopped to pieces in the markets.

Make No Mistake About It: You’re Entering Six Months of Investor Hell.

The best way to handle it …

A. Do NOT overtrade. Overtrading in general tends to lead to losses, no matter what the markets are doing.

In periods where the markets are swinging wildly, overtrading is often disastrous.

B. When you trade for speculative purposes over the next six months, be especially keen to try and buy on weakness and sell on strength … and always use a protective stop to limit your risk.

Moreover …

C. Don’t let emotions or the news get to you! I don’t know a single successful investor or trader who watches CNBC or Bloomberg, or listens to any business radio show.

They’re great entertainment, and ok to watch or listen to when you are not making investment or trading decisions.

But no matter what you do, never, I repeat never, invest based on the news. And never let any news or any kind of business media allow you to become emotional. It’s a sure fire way to lose money.

Most of all …

D. Keep the long-term in perspective for your core investment positions.

Long-term trends do not change that often. They span years, even decades. So to maximize your profit potential from them, you simply can’t let the short-term sway you.

Consider the natural resource bull markets. Last week, I gave you three undeniable long-term fundamental forces that are driving those markets higher.

Now consider the following research, released late last year by the think-tank, the Global Footprint Network …

It now takes almost 18 months for the Earth to regenerate what humanity consumes in one year.

Put another way, just to sustain current natural resource consumption levels — 1.4 planet Earths are needed, RIGHT NOW.

How many planets we'd need if everyone lived like a resident of the following...

Even more shocking from the institute’s research is the new data it published projecting what the world would consume if everyone on the planet lived like a resident of various emerging and developed countries.

You can see the data graphically displayed in the table to the right.

On the low end, if everyone in the world used natural resources at India’s very low rate of consumption, an additional planet equal to 40% of the Earth’s size would be needed, RIGHT NOW.

At China’s higher level of consumption, one full additional planet would be needed, RIGHT NOW.

If everyone consumed natural resources at the rate U.K. citizens are, an additional 3.4 planets would be needed.

And if everyone consumed resources at the rate U.S. citizens are, an additional FIVE MOTHER EARTHS WOULD BE NEEDED RIGHT NOW JUST TO BALANCE SUPPLIES WITH CONSUMPTION!

Naturally, consumption levels in the rest of the world are not likely to climb to the U.S. level of use.

But even if they were to rise to just half of U.S. consumption levels, you would still need 2.5 Mother Earths to balance the growing demand with consumption.

More from the institute …

arrow black Dead Ahead: Six Months of Investor Hell  The average American uses a whopping 23 acres worth of biocapacity, while the average European uses only about half that.

arrow black Dead Ahead: Six Months of Investor Hell  The U.S. represents just 4.5% of the world’s population, but consumes more than five times as much natural resources, a full 23% of world biocapacity.

arrow black Dead Ahead: Six Months of Investor Hell  China now consumes about the same level of resources that the U.S. does, but with its population more than four times larger, per capita resource consumption in China is less than one-fourth that of an American.

But that’s today. Five, 10, 20 years from now, China (and India) will likely be consuming far more natural resources, while I doubt U.S. or any other Western economy’s consumption will fall very much.

Bottom line to all this: The world is facing a massive shortage of basic natural resources that will, in just a few years, reach crisis levels.

Stay tuned, and as always, best wishes …


P.S. Uncommon Wisdom has teamed up with the Red Cross to help bring in donations for the earthquake victims in Haiti. If you’d like to make a contribution, just click here now.

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules